Sanctions Intelligence Update – FARC: Peace Accord and The Enduring Illicit Finance Threat

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Executive Summary

The November 2016 peace accord between the Colombian Government and the Revolutionary Armed Forces of Colombia (FARC) includes a 180-day FARC disarmament deadline on May 29, 2017. By most accounts, the FARC has been slow to comply with the demobilization process, raising questions about the future of the peace agreement, and the sanctions relief that could accompany political normalization with the FARC. Colombian President Santos, who met with President Trump on May 18, 2017 in Washington, DC, has already publicly indicated that the deadline for full FARC disarmament may need to be extended. Although the UK revoked the FARC’s terror-related designation last fall, the group remains sanctioned by the US as both a terrorist and narcotics trafficking group. Recent reports of breakaway FARC commanders and military factions — many with extensive histories in drug trafficking — suggest a continuing threat of FARC-related criminal activity. The FARC has also yet to disclose a significant portion of their illicit assets for use as reparations, as required by the accord.

On November 12, 2016, the Colombian Government and the FARC agreed to a revised peace accord that was ratified by Colombia’s Congress on November 30, 2016. The revised accord follows the results of a referendum on October 2, 2016, when Colombian voters rejected a peace accord with the FARC following four years of negotiations between the FARC and the Colombian Government..

International Drug Trafficking and Illicit Activity

The FARC is one of the few groups sanctioned by the US government as both a terrorist and narcotics trafficking group. As of May 2017, there are approximately 150 FARC-related entities and individuals included on US sanctions lists, including leadership figures, affiliated companies and individuals, international representatives, and financial facilitators located throughout the Americas and Europe. The FARC has largely been funded by extortion, kidnapping for ransom, and the international drug trade, according to US government sources. US sanctions and statements from US and Colombian officials over the last several years highlight the FARC’s international drug trafficking and illicit finance activities:

  • The FARC continued to “engage in the large scale production and exportation of cocaine from Colombia,” according to the Drug Enforcement Administration’s (DEA) 2016 National Drug Threat Assessment released in November 2016. The head of Colombia’s anti-narcotics police stated in April 2016 that the FARC has continued to be involved in drug trafficking despite ongoing peace negotiations.
  • In July 2016, the FARC’s leader ordered the FARC to cease extorting citizens; however, the governor of Colombia’s Tolima region stated in August 2016 that the FARC has continued extorting citizens in Tolima.
  • In August 2015, the US government sanctioned four Colombian nationals residing in Switzerland for supporting the FARC’s narcotics trafficking and money laundering activities. Two sanctioned individuals co-led a criminal network that operated a Zurich-based business, which provided FARC members with money remittance services and access to the international financial system.
  • In February 2014, the US government sanctioned eight individuals and five entities in Colombia, including three money exchange businesses, a real estate company, and an electronics store, for their role in narcotics trafficking activities, often conducted in collaboration with the FARC and Mexico’s Los Zetas and Sinaloa drug cartels.

CURRENT FARC-RELATED SANCTIONS ENVIRONMENT

    In September 2016, then-Secretary of State Kerry stated that the US would consider delisting FARC members from sanctions lists depending on implementation of the peace accord. The Trump administration has yet to formally outline its position on lifting sanctions following both a February 2017 phone call with Colombian President Santos and an April 2017 meeting with former Colombian Presidents Uribe and Pastrana, both of whom are critics of the peace accord. In December 2016, a bipartisan group of US Congress members called on the State Department to maintain the FARC’s designation as a Foreign Terrorist Organization. The UK revoked the FARC’s terror-related designation in October 2016, and the EU temporarily suspended its listing of the FARC as a terror group in September 2016, prior to the peace accord.

Peace Accord Compliance

While the peace accord’s full implementation is still in its early stages, recent US government and media reports indicate that the FARC and its related elements have been slow to meet its demobilization goals, making more uncertain the prospect of near-term US delistings of the FARC and its members under either the terror or narcotics-related sanctions programs.

  • Recent US government reports and officials have called into question FARC compliance with the peace accord. In March 2017, US Ambassador to Colombia Kevin Whittaker stated the “FARC continues to be one of the world’s largest drug-trafficking organizations and an organ of international terrorism.” The US State Department’s 2017 International Narcotics Control Strategy Report (INCSR) stated that “widespread reporting indicates that FARC elements urged coca growers to plant more coca” in hopes of post-peace accord investment and subsidies for high drug cultivating regions. This is one of several factors contributing to “the overall surge in coca cultivation in Colombia since 2014.”
  • In April 2017, the head of the UN Mission to Colombia stated that the Colombian Government had received a FARC list of 1,541 militia members that had entered demobilization zones. However, a significant portion of the militia—numbered in the thousands—have yet to demobilize, according to a February 2017 report from InSight Crime, a Washington, DC and Medellin, Colombia-based foundation that reports on organized crime in the Americas. Militia members act as support elements for the FARC.
  • A March 2017 deadline for the FARC to turn over 30% of its arsenal was delayed by logistical challenges in setting up demobilization zones, with some FARC members telling local media that they will not disarm until the zones are more habitable. According to Colombian officials cited in an April 2017 media report, the FARC has turned over fewer than 1,700 rifles. The group earlier announced it would surrender 14,000 rifles, which is significantly less than estimates of the total FARC arsenal.
  • US and Colombian intelligence analysts report the FARC is concealing vital components of its arsenal, including sophisticated anti-aircraft missiles, according to an April 2017 media report.
  • In May 2017, Colombian President Santos and the head of the UN Mission to Colombia suggested that the deadline for full FARC disarmament may be extended due to challenges in securing caches of weapons. In April 2017, the Colombian defense minister announced that the Colombian military had uncovered a cache of weapons and money belonging to a demobilized FARC unit. In response, the FARC’s leader indicated the UN was aware of the group’s 900 caches.
  • In January 2017, former Colombian President and current senator Álvaro Uribe, a critic of the peace accord, warned that the FARC is recruiting peasants to the demobilization zones to present themselves as FARC fighters.
  • Reports suggest that before entering the demobilization zones, the FARC may have sold illicit operations to other criminal groups. According to a 2013 Colombian media report, as negotiations for the peace accord were under way, mid-level FARC commanders sold drug trafficking franchises to the US-sanctioned Sinaloa Cartel. The FARC has allied and worked with other Colombian narcotics trafficking groups, according to the 2016 DEA report. Many of these groups are attempting to take over former FARC territory and criminal operations, according to media reports.

Delisting and Sanctions Rollback Risk

A notable portion of FARC fighters and support units, who have rejected or remained outside the peace process, maintain extensive histories in drug trafficking and may continue criminal activity under the auspices of newfangled criminal groups or other groups vying for former FARC territory.

  • As of late-February 2017, Colombian authorities had identified five FARC military factions, comprised of approximately 500 fighters, which had abandoned the peace process. Dissident FARC factions have “formed a new criminal band and continue the lucrative drug trafficking business,” according to the Colombian military cited in a May 2017 media report.
  • In December 2016, the FARC also expelled five commanders heading some of these factions, to include US-sanctioned drug trafficker Gener Garcia Molina (aka Jhon 40), described in media reports as a key FARC drug trafficking figure.
  • In December 2016, the FARC also expelled five commanders heading some of these factions, to include US-sanctioned drug trafficker Gener Garcia Molina (aka Jhon 40), described in media reports as a key FARC drug trafficking figure.
  • Various reports suggest FARC fighters may join other criminal groups. In January 2017, Colombian government authorities stated that FARC fighters are being recruited by criminal groups in Colombia and Brazil, including by the US-sanctioned drug trafficking group, Los Urabeños.
  • Dissident FARC rebels kidnapped a UN official working on crop substitution in May 2017, killed a Colombian soldier in April 2017, and continued to engage in extortion —highlighting the continued criminality of dissident FARC factions.

Assets Disclosure and Reparations

Although the final peace accord requires the FARC and its members to disclose all assets for use as reparations, material questions remain with respect to the scope, location, and will of the FARC to make this information available to authorities.

  • An April 2016 Economist report citing “an unpublished study by government analysts,” states that the FARC holds assets worth $10.5 billion as of 2012. Media reports citing government and non-government sources state that the FARC has invested in Colombian property and companies and maintains bank accounts and assets abroad including in South America, Central America, and Europe.

According to October 2016 media reports, there are remaining concerns in Colombia that the FARC will not turn over its assets, which could provide an advantage over other political parties. As part of the peace accord, the Colombian Senate approved a bill in April 2017 allowing for the FARC to form a political party that will be guaranteed ten congressional seats.

  • In March 2017, former Colombian President Uribe claimed that the FARC will not return money received from its extortion practices following a Brazilian media report, claiming that over a twenty-year period Brazilian construction company Odebrecht made payments to the FARC for the right to operate in some areas of Colombia.
  • The FARC turned over 293,000 hectares (approx. 724,018 acres) of land in Colombia’s Meta and Caquetá regions to Colombian authorities, according to a Colombian government official cited in February 2017 Colombian media reports. However, this appears to only be a fraction of its estimated total assets.

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Contact Howard Mendelsohn: mendelsohnh@camstoll.com